Schwesig praises local government help: Federal and state governments agree on relief!

Schwesig praises local government help: Federal and state governments agree on relief!

Mecklenburg-Western Pomerania's Prime Minister Manuela Schwesig has welcomed the recent agreement between the federal and state governments to compensate for shortfalls in revenue through a growth package from the federal government. Schwesig emphasizes that it is of great importance to fully compensate municipalities in order to ensure their financial stability. When weighing up the measures, she makes it clear that this is crucial to prevent mayors from having to close facilities such as outdoor pools.

The federal and state governments have agreed on an investment package that serves as a response to impending tax losses in Germany. This happened during a meeting of the 16 Prime Ministers and Chancellor Friedrich Merz (CDU) in Berlin, where the priority of compensation for municipalities was emphasized. Schwesig points out the difficult financial situation of many municipal budgets, which is made even worse by planned projects and tax losses.

Specification of the compensation

The exact details of the compensation measures are currently unclear, as a working group is expected to work out the modalities in the coming days. While Schwesig is calling for full compensation for the shortfall in revenue through the municipal share of sales tax, other federal states appear to be considering partial compensation. However, the federal government is already planning measures to compensate for the tax losses: The total tax losses amount to around 48 billion euros, distributed across municipalities, states and the federal government.

Among other things, there is a tax package on the table to relieve the burden on the economy, which is expected to amount to around 46 billion euros from 2025 to 2029. The Bundestag is due to decide on the program on Thursday, which offers, among other things, incentives for investments as well as tax advantages for companies with regard to machines and electric vehicles. Corporate tax will be reduced from 2028.

demands of the countries

The states are demanding financial compensation from the federal government, especially for highly indebted municipalities, as emphasized by Schwesig and Saxony's Prime Minister Michael Kretschmer (CDU). Kretschmer describes the agreement reached as an “important interim step”. Before the Bundestag decides on the proposed measures, the exact amount of relief for states and municipalities should be clarified in order to prevent potential disagreements in the mediation committee.

In summary, it can be said that the planned measures bring with them both opportunities to strengthen the economy and challenges for public budgets. The upcoming discussions and decisions will be decisive in determining the extent to which the set goals can be achieved and how the financial pressure on the municipalities can be further alleviated.